Tough year ahead for seaweed industry

[Philippines] Seaweed players in the country are bracing themselves for tough business this year, following the implementation of the government’s tax reform package.

“We see the industry as remaining strong this year. However, we were saddled with increased raw material prices,” said Seaweed Industry of the Philippines (SIAP) president Max Ricohermoso. He noted that farmgate seaweed prices have increased by 100 percent since the third quarter of 2017.

From P30 per kilogram, the buying price in Cebu and Manila has gone up to P85 to P90 per kilogram. He, however, clarified that the impact of the Tax Reform for Acceleration and Inclusion (TRAIN) has not kicked in yet.

Follow the trend

“The effect of TRAIN on manufacturing cost is not yet felt but surely, it will follow the general trend. Manufacturing cost in 2017 was about P9 to P10 per kilowatt hour and it is expected to increase by eight to 10 percent this year,” said Ricohermoso.

Raw seaweed cost is also seen to increase by about 10 percent due to adjustments of rates on logistics and gas. TRAIN, which took effect on Jan. 1, strips income taxes from those earning P250,000 and below annually, but places higher taxes on petroleum products, automobiles, sugar-sweetened beverages, and tobacco.

Factors

Ricohermoso said seaweed harvest has been below expectation during the second half of 2017, the reason prices escalated to as high as P90 per kilogram. He warned that due to La Niña forecast, low harvest and high prices may prevail until the second quarter of this year. He added that supply improvement from Indonesia and China’s downward price movement from February to March may also influence local prices. But amid these challenges, the industry is also gearing for a resurgence and regain the country’s status as the world’s leading producer of seaweed such as Euchema and Kappaphycus.

The Bureau of Fisheries and Aquatic Resources said it aims to increase seaweed production by at least five percent annually from 2017 to 2022. However, the industry, according to the agency, is challenged by limited access to credit and market, limited source of alternative income from seaweed, dependent mostly on selling raw dried seaweed, research and development on seaweed applications, promotion of available seaweed products, and the lack of sustainable and climate-proof agri-fishery facilities in the country. Production

Data from the Philippines Statistics Authority showed that Indonesia overtook the Philippine volume produced in 2008. Indonesia produced 2.79 million metric tons (MT) in 2009, 60 percent higher than the Philippine output of just 1.73 million MT. In 2016, the Philippines produced 1.4 million MT of seaweed, 11 percent lower than the 1.57 million MT output in 2015.

Photo: Weeding it out. Workers at a Mandaue City plant sort through carageenan. The Seaweed Industry of the Philippines expects the Tax Reform for Acceleration and Inclusion to have an effect on manufacturing costs.